I have a new client who’s previous accounting firm had allowed them a Shared Policy Allocation of 0% to Parents and 100% to the Nondependent Child:

2022 details:

• Covered Individuals:  Parents & 2 Children (1 is a dependent and 1 nondependent)
• 1095-A issued to Parents
• Parents household income is above the 400% federal poverty line
• Parent would have had a large Excess Advance Premium Tax Credit Repayment due on their tax return if 100% was allocated to them; however, the preparer allocated 100% to the nondependent child and 0% to the parents. This created a PTC Credit on the nondependent tax return and ultimately a refund.

If I am reading the Instructions properly, it states that if both filers agree to a specific allocation, that is acceptable.  The scenario above just seems too good to be true.  A possible red flag?  I am trying to determine if this is legal.

I really appreciate anyone's advice or suggestions on this.  Thank you so much!